Wednesday, February 18, 2009

In the first years of the nineteenth century, Frederic Tudor pursued what everyone thought was a crazy idea—he believed he could make money by selling ice to people in tropical locations. Although people who lived in high altitude or in northern latitudes had cut ice from frozen lakes, ponds, and mountaintops for centuries, no one had ever thought to transport the ice to distant locations, especially if that transportation involved ocean-going vessels and locations where the ice could melt within a day due to high temperature. Frederic Tudor committed himself to proving that it could be done, not just as a stunt, but as a way of making himself rich. With capitalist ingenuity and years of struggle, he succeeded and became a leading businessman in nineteenth-century America.

Starting in 1806, Tudor and his associates began carrying ice in the holds of sailing vessels from New England to the Caribbean. Though he would spend the next few years in and out of debtor's prison and waiting out the American Embargo on the eve of the War of 1812, Tudor eventually began making profits in the 1810s. He was also able to carry fresh tropical fruits back to Boston without spoilage, an unheard of feat in his time. By the 1830s, he and his company began shipping ice to the British in Calcutta, India, some 16,000 miles away and a four month long trip. Due to Tudor's innovations in packaging and insulation, the 180 tons he shipped only lost 80, leaving him a lucrative remainder to sell in summertime India.

By the time he died in 1864, Tudor witnessed an explosion in the ice trade. He had viable competitors and the world came to depend on ice harvested from frozen American lakes and shipped to the far corners of the earth. At one point before the Civil War, the value of American ice exports was second only to cotton. The trade persisted into the late nineteenth and early twentieth centuries when electric refrigeration became a better option.

Wow! That is great. I also like the way you ended the post, describing how even though Tudor had been the leader and innovator, the market (that he created) grew so much that there were many viable competitors. I wonder if people called him a monopolist (if they used that term in the first half of the 1800's)? If so, this could be added to the long list of examples of non-government-backed monopolies and how they simply don't become coercive? I find it helps to have an arsenal of such examples when having the inevitable "what about monopolies" conversation with people.